How to Raise Your Rents Without Losing Your Tenant
Almost every year property expenses increase. Your insurance goes up, your taxes go up and if your property is in an HOA, your HOA dues go up. And since we're in business to make money it's necessary to increase rental amounts every year.
Sadly, I know many investors who are so afraid of ticking off their tenants that they haven't increased rents in years. But think about it this way: It's much better to raise the rent $30-50 a month every year, versus waiting forever and all of the sudden raising the rents $200 a month. So how do I raise the rent every year on my tenants? Well first, I raise it about 5% a year. I do this by sending my tenants a letter about two months before the rent increase takes effect.
Now, you want to see this letter right? Good. Below is the exact letter that I send to my tenants every year. Thanks to this letter I've never had a tenant balk over a rental increase. You have my permission to use it and to start increasing your cash flow today.
John Doe
123 Main St.
Manassas, VA 20110
Dear John,
The time of the year has come when it is time to renew your lease. I want to continue to have you as a resident, and appreciate how friendly and easy you are to work with. Thank you so much for paying your rent on time every month and taking such great care of the property.
As you can imagine, over the last year my expenses on the property have increased because of taxes, insurance and inflation (especially the HOA fee which is over $200.00 a month).
Anyways, I am swallowing most of the fees since I enjoy having you as a resident and the good news is that your rent is only slightly increasing. I want to make the payments as low as possible and the rent is only increasing $40.00 a month. Your new monthly rent amount will be $1,240.00, effective December 1, 20XX. If you have any questions about this, please feel free to give me a call. I look forward to having you as a resident for a long time.
Warmest Regards,
Jason Hanson
703-555-5555
P.S. I have included a new lease for the upcoming year. Please read it over and sign it, where I have highlighted in yellow, then mail it back to me (this is the same lease you signed last year, nothing has changed except the dates and new rent amount). Please don’t forget to initial the bottom of each page. Checks will continue to be made to ABC Realty Group, LLC and sent to the same P.O. Box.
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